Economic Indicator: 'optimist' Silverstein sees slow recovery.

• Author: Diddlebock, Bob

THE EARLY OCTOBER HEADLINES CLOSING 2002's FISCAL third quarter -- one of the more bruising three-month periods in recent Colorado economic history -- couldn't have been more glum.

"Recession never left state, data suggest." ... "3rd quarter worst for stocks since '87." ... "Metro-area foreclosures increasing in weak economy" ... ... "Manufacturing declines in September." ... Construction spending falls."

Pick an industry -- technology, telecommunications, tourism, manufacturing, whatever -- and over the last 18 months, no one in Colorado has needed a weatherman to tell which way the economic winds have been blowing. Call it a meltdown, a tsunami, a disaster, or a recession. It has been ugly out there -- the ugliest since the collapse of the oil and gas industries brought the state to its knees in the mid-1980s.

Now, in peering through the clouds, can economists like Patricia Silverstein of Jefferson County-based Development Research Partners and the chief forecaster for the Denver Metro Chamber of Commerce offer up any rays of sunshine? Well, yes, but only to a tepid extent.

"The reality is that we're still sustaining hits to our economic system," Silverstein says. "We're not out of the woods yet, but I do believe that we have gone through some of the worst that we will." She pauses and draws a breath. "But, with that said," she continues, "I don't see that we have turned the corner. We're kind of somewhere along the bottom at the moment."

In other words, this particular economic storm has uprooted too many trees and flattened too many industries to warrant an overnight recovery. Several years' worth of high leverage, a dearth of earnings, egregious price-cutting, overpaying for assets, stock market hoo-hah, and unrealistically high revenue expectations can do that to an economy. Heck, these days, even intangibles are painful. Who in Denver, for example, hasn't cringed when they've seen former Qwest International CEO Joe Nacchio and still-chairman Philip Anschutz become poster boys for corporate gluttony?

Silverstein, in her Oct. 2 "Business and Economic Indicators" report tracking labor and employment, the consumer sector, and real estate in the seven-county Denver metro area, writes that the hard-hit telecommunications and high-technology job markets, for example, will take another 12 to 18 months to recover. But low interest and inflation rates will at least keep things stable.

"We were somewhat surprised, but encouraged, to see that...